How to Fill Out the Real Estate Withholding Certificate

The real estate withholding certificate or Form 593-C as it is popularlyaknown, is used by sellers or transferors to determine whether they qualify for a partial or a full exemption from withholding. The following information is useful:



If you need help in filling out your Real Estate Tax Withholding Certificate please call us at 407-344-1012, or go to www.freedomtaxfl.com

• Form 593: The real estate withholding tax certificate


• Form 593-C: The real estate withholding certificate


• Form 593-E: The real estate withholding-calculation of loss or gain


• Form 593-I: The real estate withholding installment sale acknowledgement


• Form 593-V: The voucher for payment for the real estate withholding

It is essential that you are aware of the fact that even if you do qualify for an exemption from withholding, you are still liable to file for the California income tax return and pay any form of tax that is due on the sale of California real estate.

It is the buyer's responsibility to provide a photocopy of the forms 593, 593-C, 593-E, and 593-I to the seller unless the responsibility is handed over to the REEP. The buyer has to make sure that the tax year on the forms is identical to the year in which the transaction is performed. The seller or the transferor has to complete and sign form 593-C and submit it to the REEP when the escrow closes; this will be done in the case when the seller qualifies for an exemption. Do not send the form to the California Franchise Tax Board (FTB) unless you are requested to do so. In accordance with Californian law, the form 593-C has to be kept with the REEP for five years.

The seller must submit form 593-C before the closure of escrow in order to prevent withholding; otherwise, if it is submitted after the closure of escrow, the withholding amounts may only be acquired by claiming it as credit on the year's tax return.

The Instructions

Part I:

• You must write down the private mail box (PMB) in the address field. Write “PMB” and then the box number.


• If you are a foreign seller, write down your complete foreign address in this order: city, country, province/region, and postal code. Please do not abbreviate the country's name.


• Enter your (seller) name, TIN (tax identification number), and the address. It is important to know that the seller must provide a tax identification number, or form 593-C will become void. If you are willing to furnish the buyer with the form's copy, erase your TIN from that copy.


• If the seller is an individual, enter the individual taxpayer identification number (ITIN) or the social security number (SSN). If the sellers are spouses and they want to file a joint return, then write down the SSN or the ITIN for each spouse. Do not enter the data for more than one seller; instead, utilize a different form 593-C for each spouse.


• If you are a non-resident, enter your ITIN in place of the SSN.


• If you are a grantor trust, enter your name and SSN. The grantor trust is exempted from withholding and hence, the individual transferor or seller must account for the sale and declare the withholding on their tax return. If the grantor has passed away, enter the name of the trust and its federal employer identification number (FEIN). Please do not write down the trustee's name or SSN.


• In the case of the seller being a non-grantor trust, mention the name of the trust and the FEIN. Do not write down the trustee's information.


• If the transferor or the seller is a single member limited liability company (SMLLC), mention the single member's name and tax identification number.


• Remember to enter your ownership percentage to two decimal places. If you qualify for incidental purposes, enter 0.00 and move on to the seller signature section. There will be no real estate withholding on you. Such examples are co-signers on titles, like parents co-signed to assist their children to qualify for a loan or family members entitled to receive property after the owner's death.

Part II: 

This section contains nine boxes which have to be checked, if any one or more of the following conditions apply to you as a seller or transferor to determine whether you are fully certified for exemption from the withholding. It is the most integral part of filling out the real estate withholding certificate.

1. The property is the seller's or transferor's principal residence and the seller has resided there for a minimum of two years.


2. The seller or the transferor last used the property as their principal residence without considering the two year rule.


3. You are making zero gain or have experienced losses for purposes of the California income tax return. If you check this box, you also need to complete form 593-E.


4. The seller's property is being forcibly converted or threatened, or the seller wants to obtain a property which is related to or similar in service for income tax purposes.


5. The property qualifies for a non-recognition treatment under the IRC, such as if it is being transferred to a company controlled by the seller.


6. The transferor or the seller is a company, corporation, or an LLC that has a permanent business foothold in California.


7. The seller must be a California based partnership, a partnership certified to conduct business in California, or an LLC that is not a single member LLC. Checking this box means that the LLC or the partnership must still withhold on non-resident partners.


8. The seller is exempted from paying taxes under federal or California law. Examples include educational, charitable, and religious institutions.


9. If the seller is an individual retirement account, charitable remainder trust, insurance company, or a qualified pension sharing plan, then withholding is not applicable.

Part III:

This section consists of three situations which may partially or sometimes even fully exempt a seller from withholding. Complete this section if you didn't meet any of the exemptions in part II.

1. If the property is the part of a simultaneous like-kind exchange which falls under section 1031 of the IRC, then the seller is exempt from withholding.


2. If the property is the part of a deferred kind-like exchange which falls under code 1031 of the IRC, then the transfer is exempted from withholding in the initial stage. However if the exchange does not take place or does not qualify for non-recognition treatment, the withholding becomes compulsory.


3. The property is being transferred as an installment sale where the buyer is liable to withhold on the principal portion of every consecutive installment payment. This should be proven by an attached promissory note by the buyer.           Original source: http://freedomtaxaccounting.com/how-to-fill-out-real-estate-withholding-certificate/